The Ministry of Non-conventional Energy Sources (MNES) aim to provideelectricity to 25,000 remote un-electrified villages in India through
renewable energy sources and distributed genera-tion adopts the key
policy instrument of capital subsidies and capacity building of local
organizations. National and international experience shows, however,
that this model would not suffice to make the electrification programme
succeed in the long run. This study aims to evolve implementation models
that would lead to sustainability. It was assumed that MNES in its policy
aims wants to reach the poorest of the poor in the Indian villages,
so the tribal villages were the aim of the study.
The implementation model that the Government of India currently aims
to use for electrifying its remote villages with renewable electricity
is inappropriate for a large number of the target villages. The planned
uniform policy of capital subsidies of 90 to even 100% will over-subsidise
many and under-subsidise the most needy. This conclusion stands out
after a detailed survey in a number of poor and remote tribal villages
in Orissa, and consultation of a number of stake-holders.
Implementation models should be more tailor-made in order to actually
bridge the gap between costs and willingness to pay and to facilitate
the reduction of the gap itself over time. The proposed implementation
models recognize that providing electricity to remote villages is signifi-cantly
more expensive than providing electricity to urban areas and grid-connected
villages. Three types of implementation models for three types of villages,
varying in economic situation, on which the policy should be tailored,
were distinguished:
I. Villages with middle income families where ability to pay exists
or will get built up with just the provision of electricity. The private
sector would make investments into village electrification projects
with government providing tariff assurance that will diminish over time
and eventually stop.
II. Villages with low-income families where potential for increasing
economic activity is very clear and can be realized with provision of
electricity and business development services. The government would
provide capital subsidies and diminishing revenue subsidies for a limited
period of time. Private sector will take up responsibility for operation
and maintenance and provide business development services for increasing
economic activity including making crucial investments.
III. Villages with low-income families where potential for increasing
economic activity is unclear. Thus, electricity has to be provided to
improve the quality of life and more work has to be done to develop
the potential for increasing economic activity. The government would
provide capital subsidies and revenue subsidies for extended peri-ods.
It is hoped that the presence of private sector in the village will
lead to develop-ment of potential for increasing economic activities.
Subsidies could be re-duced/terminated eventually.
The models above provide for a more balanced approach to the enormous
diversity in villages and income levels in the portfolio of villages
in the Indian village electrification programme. The challenges posed
by ownership, affordability and post-commissioning provisions are addressed
in a better way. The results of this study will be discussed with the
relevant policymakers in the Government of India.